Cost Allocation Methods at Ford

• Values:

• Direct Costs: $30,000,000
• Indirect Costs: $15,000,000
• Allocation Bases: Number of Products, Labor Hours
• Requirements:

0. Allocate indirect costs using the number of products as the allocation base for Ford.
1. Allocate indirect costs using labor hours as the allocation base for Ford.
2. Compare and contrast the results of the two cost allocation methods.
3. Discuss the importance of accurate cost allocation in decision-making at Ford.